March 20, 2018 

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AD CURVE: The aggregate demand curve, which is a graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand, or AD, curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the aggregate supply curve (which is actually two curves, the long-run aggregate supply curve and the short-run aggregate supply curve). The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate effect, real-balance effect, and net-export effect.

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The satisfaction that buyers receive from the purchase of a good, which is assumed constant when a demand curve is constructed. Buyers' preferences is one of five demand determinants that shift the demand curve when they change. The other four are buyers' income, other prices, buyers' expectations, and number of buyers.
Buyers' preferences affect the willingness to purchase a good. This demand determinant is based on the satisfaction of wants and needs that buyers obtain from a good. If a good provides greater satisfaction, then buyers are inclined to purchase more. If a good provides less satisfaction, then buyers are inclined to purchase less.

The Willingness to Buy

Buyers purchase goods that satisfy wants and needs. Buyers are more willing to purchase those goods that provide greater satisfaction, for a given price. If the amount of satisfaction derived from a good changes, then buyers are inclined to change their demand.

Consider the example of Wacky Willy Stuffed Amigos, a cute and cuddly line of stuffed creatures. Buyers decide how many Stuffed Amigos to buy, at a given price, based on the satisfaction generated. These creatures are extremely cute and cuddly. Some say that they are even adorable. They make people happy. But tastes can change.

  • Like It More: Suppose that a noted guardian of public taste--like television icon, Brace Brickhead; financial impresario, Winston Smythe Kennsington III; or baseball legend, Harold "Hair Doo" Dueterman--proclaims an undying affection for Wacky Willy Stuffed Amigos. If this guardian is, in fact, influential over public tastes, then more people will likely decide that they too must have Wacky Willy Stuffed Amigos. The demand, as such, increases.

  • Like It Less: Alternatively, suppose that these guardians of public opinion proclaim that Wacky Willy Stuffed Amigos cause cancer, lead to mental illness, or are part of a master plan by a foreign leader to rule the world. If so, then people might tend to reduce their preferences for Wacky Willy Stuffed Amigos. The demand in this case decreases.

Shifting the Demand Curve

Buyers' Preferences

A change in buyers' preferences causes the demand curve to shift. This can be illustrated using the negatively-sloped demand curve for Wacky Willy Stuffed Amigos presented in this exhibit. This demand curve captures the specific one-to-one, law of demand relation between demand price and quantity demanded. Buyers' preferences are assumed to remain constant with the construction of this demand curve.

Now, consider how changes in buyers' preferences shift the demand curve. Buyers' preferences are relatively straightforward. If buyers like a good more, they buy more. If they like a good less, they buy less.

  • Increased Preferences: An increase in buyers' preferences cause an increase in demand and a rightward shift of the demand curve. Click the [Like It More] button to demonstrate.

  • Decreased Preferences: A decrease in buyers' preferences cause a decrease in demand and a leftward shift of the demand curve. Click the [Like It Less] button to demonstrate.

The Power of Preferences

Something as seemingly nebulous and fleeting as buyers' preferences, tastes, attitudes, likes, and dislikes, might not appear to have a major impact on demand. They can and they do. This power of preferences is not lost on business leaders, government leaders, and other powers that be.

The "commercial" media offers a glimpse of this power. Advertising, through television and radio commercials, newspaper and magazine advertisements, highway billboards, internet banner ads, and corporate sponsorship of sporting events, is largely designed to influence buyers' preferences. Not only is advertising a multi-billion-dollar industry unto itself, but commercial advertising also supports the broadcast television and radio industries; it is a major source of revenue for newspaper and magazine publishing; and it provides ample funding for professional sports. All of the folks working in these industries can attribute the bulk of their incomes, directly or indirectly, to the task of influencing buyers' preferences.

Other industries also owe their very fortunes to the ebb and flow preferences. The clothing industry is the most pronounced example. Each year fashion designers and clothiers try their best to offer products that suit or influence buyers' preferences. Other products, including automobiles, television programming, music, children's toys, and even small kitchen appliances, seek to be on the "cutting edge" of the "latest trends" that "capture the public's fancy." In other words, to stay up with and try to influence the ebb and flow of preferences.


Recommended Citation:

BUYERS' PREFERENCES, DEMAND DETERMINANT, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2018. [Accessed: March 20, 2018].

Check Out These Related Terms...

     | demand determinants | buyers' income, demand determinant | other prices, demand determinant | buyers' expectations, demand determinant | number of buyers, demand determinant | supply determinants |

Or For A Little Background...

     | demand | market demand | demand price | quantity demanded | law of demand | demand curve | change in demand | change in quantity demanded | ceteris paribus | satisfaction |

And For Further Study...

     | Marshallian cross | comparative statics | competition | competitive market | market | consumer surplus |

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